Abstract: A method of manufacturing a high-temperature shape memory alloy includes the steps of cold-working a high-temperature shape memory alloy, in which a reverse martensite transformation start temperature (As) in a first heating after cold working reaches 350.degree. C. or above. Thereafter, the cold-worked alloy undergoes a first heat treatment for a period of time within the incubation time required for recrystallization or less, and at a temperature higher than a reverse martensite transformation finish temperature (Af). Finally, the resultant alloy is annealed with a second heat treatment, at a temperature which is not less than the plastic strain recovery temperature and not more than the recrystallization temperature. Specifically, the first heat treatment is performed for a period of three minutes or less at a temperature which exceeds 500.degree. C. and which is lower than the melting point of the alloy. The composition of the high-temperature shape memory alloy is Ti.sub.50 Ni.sub.50-x Pd.sub.